Recently a colleague said that there was no return on investment (ROI) for Intrapreneurship for large organizations. The financials did not justify the investment. He is both right and wrong. It depends on your perspective.
1. Are you looking at the traditional ROI when 80% of assets were tangible and a majority of the percent increase in GDP was from tangible assets or are you looking at the new reality where 80% of organizations assets are now intangible?
According to the U.S. Bureau of Economic Analysis (BEA) “intangible assets drove 90% of GDP growth between 2000 and 2005.” Intangible assets include investments in research and development, design and development and human capital.
2. Are you looking at human capital as an expense or an investment? Employee salaries make up half of many company’s operating expenses. Investors have been evaluating the worth of companies based on intangible assets for years.
In his article Return on Intangibles Jay Cross says, “Instead of relying on expectations for a stable past, investors began betting on the future.” They are placing bets on human capital – “the know-how and abilities of an organizations people”.
3. Are you investing in people that can be effective in the core business or those that can build new growth businesses? A high potential in the core business is not necessarily a high potential when it comes to building a new business.
In his article The Entrepreneurial Employee, Steve Strauss reminds us that, “The growth of many corporate giants has been achieved by the entrepreneurs within. Think Apple, Google, Intel, Lockheed-Martin and many more.”
4. Are you investing in transformational innovations or product line extensions and enhancements? Most organizations have spent the last decade investing in products and services that were mature or at the end of their life cycle.
According to Accenture, “Fully 64% of the 591 companies – are still focusing largely on line extensions” which translates into low returns and little business value. “Only 20% view their innovations as game changers.”
5. Are you making a distinction between the types of innovations you are developing? The type of innovation impacts key elements of Intrapreneurship – the type of resources, leaders, systems and processes, environment, risk taking and metrics.
Organizations often fail to understand the distinction between different types of innovations and why each of them requires a different set of skills and capabilities.
6. Are your leaders talking about Intrapreneurship but not actually doing anything about it? Intellectually executives understand the importance of being more intrapreneurial but emotionally they have not bought in. They do not have an experience base they can relate to.
In the article It Sounds Great in Theory, Susan Mazza says “It is only when you take action that you can begin to observe the gap between what you think you know and understand and what you actually know.” Intrapreneurship is an intellectual and emotional experience. It’s all about the experience.
The academic world has found that there is an ROI for Intrapreneurship – higher levels of productivity, engagement, innovation and financial performance. The business world is more skeptical.
Many organizations are concerned that the risks of implementing Intrapreneurship outweigh the benefits. Financial risk is the most obvious but perhaps the bigger risks are not so obvious. There is the risk of losing some of your best and brightest employees, a risk to your reputation and competitive position in the marketplace – the very things that create value today.
Intrapreneurship is a way of thinking and acting. It’s a mindset, a competence, a way of being. It’s how you see the world – the old world and the new world.
It really depends on your perspective. What do you think! Is there an ROI for Intrapreneurship?